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An Ordinance of the County of Allegheny establishing a Tax Increment Financing Policy for Allegheny County.
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WHEREAS, the June 25, 1998 Tax Increment Financing Guidelines of the Department of Economic Development have not been updated or amended since the adoption of the Home Rule Charter and the establishment of the new form of government in Allegheny County;
Whereas, the Pennsylvania Tax Increment Financing Act has been broadly interpreted to allow the use of tax increment financing for any project or development in any area designated "blighted" by local governmental bodies;
WHEREAS, Council wishes to provide developers and the Allegheny County Department of Economic Development with more specific guidelines than are provided by state law for the appropriate use of tax increment financing within Allegheny County;
The Council of the County of Allegheny hereby enacts as follows:
Section 1
In accordance with the Tax Increment Financing Act, 53 P.S. § 6930.5, and the Administrative Code of Allegheny County, § 915.01, the Allegheny County Council hereby adopts the following policy and procedural guidelines.
Purpose:
The purpose of a tax increment financing is to prevent, arrest and alleviate blighted, decayed, and substandard areas in municipalities; to provide additional and alternative means to finance public facilities and residential, commercial, and industrial revitalization; to provide new employment opportunities; and to increase the tax base and to improve the general economy of the County.
Program Description:
Tax Increment Financing is authorized by the Commonwealth of Pennsylvania under the Tax Increment Financing Act 1990, July 11, P.L. 465, No. 113 (the "Act"). TIFs are a mechanism whereby all or a portion of the new taxes generated by a development over a limited term can be used to finance improvements related to that development. The Act provides for the creation of tax increment districts in which all or some of the tax increment generated by development in that district can be used to finance public or private improvements associated with that development. Generally, the incremental increase in real estate taxes resulting directly from a development project is used to support a revenue bond issued by a municipal authority (created under the Urban Redevelopment Law of 1945). The bond proceeds are used to provide for improvements related to the proposed project; however, the tax increment can include any tax increase resulting from the increase in property values or from the increase in commercial activity as a result of the project including hotel, amusement, business privilege, and parking taxes. The increment generated by the project may be used to finance a bond issue, however, it may also be used to underwrite a direct loan or some other appropriate financing structure.
Policies:
The following substantive policies should be considered as a guide to developers and others who may be interested in obtaining tax increment financing; by the Department of Economic Development in determining whether to recommend tax increment financing for any particular project; and by the Allegheny County Council in determining whether to approve a request for tax increment financing.
1. It shall be the policy of Allegheny County to utilize tax increment financing principally for projects located in urban areas or brownfields;
2. It shall be the policy of Allegheny County to utilize tax increment financing principally to facilitate the creation of high quality employment opportunities;
3. It shall be the policy of Allegheny County to utilize tax increment financing only where the project adds value to the regional economy, and not to one area of the County at the expense of another area of the county;
4. It shall be the policy of Allegheny County to use tax increment financing where there is a substantial opportunity for participation in the project by existing County residents, including individuals and small businesses; for example, for commercial developments, at least 10% of the building space should be targeted for use by local business or other local uses;
5. It shall be the policy of Allegheny County to use tax increment financing only to assist with the financing of public improvements and/or infrastructure;
6. It shall be the policy of Allegheny County to participate in tax increment financing only to the extent necessary to make a project viable, with the maximum participation rate to be 60%, except in exceptional cases for projects that create significant economic impact in depressed communities, where the maximum participation rate will be 75%;
7. It shall be the policy of Allegheny County to avoid the use of tax increment financing for projects which are likely to produce principally part-time, short term and/or low paying employment opportunities;
8. It shall be the policy of Allegheny County to avoid the use of tax increment financing on projects located on unimproved areas and greenspaces, except those tracts of land immediately adjacent to the Greater Pittsburgh International Airport;
9. It shall be the policy of Allegheny County to avoid the use of tax increment financing on projects that have an adverse environmental impact;
10. It shall be the policy of Allegheny County to avoid the use of tax increment financing for projects which principally consist of retail shopping areas.
11. For residential projects, it is the policy of Allegheny County to utilize tax increment financing only where those proposed residential projects are likely to bring new residents to the County, or to increase home ownership in the County by providing affordable housing, and where such project balances may increase in residents with tax revenue required to support the additional municipal and educational services required.
12. It shall be the policy of Allegheny County to utilizing tax increment financing only where there is a finding of blight. Blight shall mean that one ore more conditions exists on the site:
unsafe, unsanitary, inadequate or overcrowded conditions of the dwellings in the area;
inadequate planning of the area or excessive land coverage by the buildings;
the lack of proper light and air and open space;
the defective design and arrangement of the buildings;
faulty street or lot layout; or
economically or socially undesirable land uses.
13. To determine whether blight exists, the following factors shall also be specifically considered:
the tax base and the tax millage of the local municipality where the proposed project is located;
the average income and the amount of poverty within the municipality where the project is located;
whether the location of the project is urban or rural;
whether the location of the project is improved or unimproved;
whether the location has any special historical, architectural or environmental significance; and
the need for the public improvements or infrastructure of the municipality and County where the project is located.
14. It is the policy of Allegheny County to utilize tax increment financing only under the following Financial Terms:
a. Rate of Participation: In order to permit the taxing bodies to realize some immediate benefit from the development of a project and to utilize only that portion of the tax increment which is necessary to support a proposed project, the taxing bodies affected by a project will be requested to participate in the TIF by pledging a limited percentage of the anticipated tax increment to the TIF. The rate of participation will determine the amount of TIF which will be provided to a project. The rate which is established for a project will depend upon its economic impact and will be set after the Authority and the Department have exhausted attempts at securing other project funding. However, the maximum participation rate which will be considered is 60%, except in the case of projects in depressed communities or that create significant economic impact, where the maximum participation rate will be 75%. Depressed communities are those that are CDBG eligible; designated as state enterprise zones or federal enterprise communities; Act 47 communities; contain major vacant or underutilized industrial sites including brownfield properties or exhibit other criteria that are indicative of major or long-term economic disinvestment. Exceptions can be approved only by the Director.
b. Term: Tax Increment Districts can only exist for a maximum of 20 years. Any debt obligations financed with the tax increment must be retired within this time period.
c. Interest Rate: The interest rate is dependent upon the use of the TIF proceeds, the conditions of the capital markets, and the credit enhancement provided for debt obligations.
d. Security: The developer will be required to guarantee a minimum tax payment of 100% of the estimated increment irrespective of the percentage of participation in the project by the taxing bodies. Letters of credit, bond insurance or some other acceptable form of credit enhancement may be required as additional security for the obligation. Tax increment financing bonds will not be supported by general obligations of the County.
e. Minimum Project Size/Bond Issue: Because of the costs associated with the TIF process and the issuance of debt obligations, the minimum project size shall be $5 million and the minimum TIF bond obligation shall be $1 million. The Director may approve exceptions in cases where alternative financing is unavailable.
f. Taxable and Tax-Exempt Issues: The improvements financed with the proceeds of a TIF bond may be privately or publicly owned. If publicly owned and considered to be public improvements (benefiting more that one property owner), the project may qualify for tax-exempt financing.
Procedures
The following is a description of the procedures and provisions for securing Allegheny County Council approval of a TIF district.
A. Applicants will be required to prepare and submit to the Allegheny County Department of Economic Development ("the Development") a Project Review Form for consideration for tax increment financing. In addition to the general information related to the proposed project, the submission requires the completion of an economic impact analysis (as outlined in the Project Review Form) which, when completed by the applicant, will provide the Department with the information necessary to determine the eligibility of the project and establish terms for the use of TIF by the affected taxing bodies, as well as to assist in evaluating the appropriateness of tax increment financing for the proposed project.
B. The Department will initially determine the eligibility of the application in consideration of the policy guidelines set forth above and using other criteria that it may develop and publish.
C. The Department may then request the County Council to consider establishing a Tax Increment Financing District. This request shall be in the form of a Resolution submitted by the County Manager to Council in accordance with the "Procedure for Placing Items on the Agenda" found in the Rules of Council.
D. A summary of the project will accompany this Resolution. The summary will include the following items:
1. The name of the project;
2. The developer;
3. The taxing bodies involved;
4. Written and graphic description of the proposed project;
5. Summary of financing sources;
6. Estimation of amount of Tax Increment Financing necessary and justification why project cannot proceed without funding;
7. Summary of Economic Impact of the project;
8. Summary of the quality and nature of the jobs created by the project;
9. Summary of the Environmental Impact of the project;
10. Summary of the tax base, the millage rate and the economic conditions within the municipality and/or area where the project is located.
11. Demonstration that the project adds value to regional economy and not just a change in consumption patterns.
12. Proof that the County's portion of the T.I.F. shall be used only to finance and build the public works infrastructure portion of the project;
13. Blight Designation - whether the area has been designated as blighted and will include the conditions of blight as defined both in the Urban Redevelopment law and as described above.
14. Consideration of other Policy Guidelines - The summary shall address all other policy guidelines relevant to the particular project in question.
II. Formal Presentation to Taxing Bodies - Following the first reading of the Resolution of intent at a regular council meeting, the Resolution will be referred to Council's Committee on Economic Development. At this meeting the authority will be invited to give a formal presentation on the project to Council.
III. Resolution of Intent - Council will then consider the Resolution in committee. Following the vote in committee, it will then be placed on the agenda for the next regular council meeting for its second reading.
If the county is the municipality that will create the tax increment district it is responsible for the following.
IV. Public Hearing -
A. If the county is the municipality that will create the tax increment district, the Department of Economic Development will hold a public hearing to allow interested parties the opportunity to express their view of the project.
1. Notice will be published according to the Sunshine Act and sent to the governing body of any municipality or school district that levies property taxes within the boundaries of the proposed TIF district.
2. Written notice will be given to County Council and specifically to the Chair of Council's Economic Development Committee.
V. Resolution to create TIF District - The governing body of the municipality that will create the district may pass a resolution to adopt the TIF district not earlier than three weeks after the public hearing. Thus, if Allegheny County is the municipality that is creating the district, County Council will consider the resolution to adopt the TIF district.
A. This resolution will be presented to County Council from the Redevelopment Authority through the County Manager in accordance with the "Procedure for Placing Items on the Agenda" found in the Rules of Council.
B. The TIF project plan and a summary of the project plan will accompany the Resolution to participate. This summary will include the following.
1. Description of the boundaries of the tax increment district to identify with certainty the territory included. The boundaries should include only whole units of property assessed for general property tax purposes.
2. The date the district will be created. (maximum of 20 years unless amended)
3. Name of the district
4. Findings as to whether:
i.) The district is a contiguous geographic area within a redevelopment area
ii.) The improvement of the area will add value to all other real property in the district
iii.) The aggregate value of all equalized taxable property of the district does not exceed 10% of the total value or equalized taxable property within the municipality
iv.) The area comprising the district is not subject to adequate growth and development through investment by private enterprise or not reasonably anticipated to be adequately developed or further developed without the adoption of the plan
v.) A feasible method exists for the compensation and relocation of individuals, families and businesses that will be displaced
vi.) The project plan conforms to the municipal or county master plan, if any
vii.) The project plan will afford maximum opportunity, consistent with the sound needs of the community as a whole, for the rehabilitation or redevelopment of the tax increment district by private enterprise
viii.) The district is a blighted area containing characteristics of blight as described in the Urban Redevelopment Law and as described above, and the project to be undertaken will substantially help to eliminate such conditions of blight
If the county is not the municipality that will create the tax increment district and is only asked to participate, the following steps must occur:
VI. Resolution to Participate - The governing body of a municipality or school district that levies property taxes within the boundaries of a proposed tax increment district shall, by ordinance or resolution, agree to participate or opt not to participate in whole or in part in the TIF district. This resolution must be adopted and a copy delivered to the governing body of the municipality which will create the district on or before the date of the public hearing.
A. This resolution will be presented to County Council from the Authority through the County Manager in accordance with the "Procedure for Placing Items on the Agenda" found in the Rules of Council. (12:00 Noon Thursday prior to the Regular Meeting of Council).
B. The TIF project plan along with a summary of the project plan will accompany the Resolution to Participate. This summary will include the following.
1. Description of the boundaries of the tax increment district in order to identify with certainty the territory included. The boundaries should include only whole units of property assessed for general property tax purposes
2. The date the district will be created. (maximum of 20 years unless amended)
3. Name of the district
4. Findings as to whether:
i.) The district is a contiguous geographic area within a redevelopment area
ii.) Improvement of the area will add value to all other real property in the district
iii.) The aggregate value of all equalized taxable property of the district does not exceed 10% of the total value or equalized taxable property within the municipality
iv.) That the area comprising the district is not subject to adequate growth and development through investment by private enterprise or not reasonably anticipated to be adequately developed or further developed without the adoption of the plan
v.) A feasible method exists for the compensation and relocation of individuals, families and small businesses that will be displaced
vi.) The project plan conforms to the municipal or county master plan, if any
vii.) The project plan will afford maximum opportunity, consistent with the sound needs of the community as a whole, for the rehabilitation or redevelopment of the tax increment district by private enterprise
viii.) The district is a blighted area containing characteristics of blight both as described in the Urban Redevelopment Law and as described above and the project to be undertaken will substantially help to eliminate such conditions of blight
C. Following the first reading of the Resolution to Participate, the resolution will be referred to Council's Committee on Economic Development. Representatives from the Authority will be available to discuss the TIF district at this time.
VII. Public Hearing -
A. If the county is not the municipality that will create the tax increment district, the governing body of the municipality which will create the tax increment district will hold a public hearing to allow interested parties the opportunity to express their views of the project.
1. Notice will be published according to the Sunshine Act and sent to the governing body of any municipality or school district that levies property taxes within the boundaries of the proposed TIF district.
2. Once the Department of Economic Development Receives notice of the public hearing they will notify Council and the Chair of Council's Economic Development Committee.
VIII. Cooperation Agreement - The Authority, developer, and the three taxing bodies will execute an agreement to proceed with the project and the tax increment financing.
IX. Amendment of the Plan - If the County is the body that created the TIF, the Council at any time may adopt an amendment to a project plan which shall be subject to approval in the same manner as the original project plan and in accordance with §6930.6 (c) of the Tax Increment Financing Act].
SECTION If any provision of this Ordinance shall be determined to be unlawful, invalid, void or unenforceable, then that provision shall be considered severable from the remaining provisions of this Ordinance which shall be in full force and effect.
SECTION Any Resolution or Ordinance or part thereof conflicting with the provisions of this Ordinance is hereby repealed so far as the same affects this Ordinance.